Strategic Marketing

STRATEGIC MARKETING

Management Centre

What is Consumer Behaviour?

• The behaviour that consumers display in seeking, purchasing, using, evaluating and disposing of products that they expect will satisfy their needs.

• CB is the study of how individuals make decisions to spend their resources on need satisfying goods and services.

Model of Consumer BehaviourMarketing and Other Stimuli

Buyer’s Black Box

Buyer’s Response

??

Factors Influencing Consumer BehaviourCultural•Culture•Subculture•Social Class

Social•Household type•Reference groups•Roles & status

Psychological•Motivation•Perception•Learning (memory)•Beliefs & attitudes•Personality & self-concept

Consumer

BUYER DECISION PROCESS

Lifestyle

Buyers’ responses•Product service & category selection•Brand selection•Reseller selection•Purchase timing & repurchase intervals•Purchase amount

Personal•Age & lifecycle stage•Occupation•Education•Economic situation

Marketing programs•Marketing objectives•Marketing strategy•Marketing mix

Environmental influences•Economic•Technological•Political

Experiences

Decision-Making ModelDecision-Making Model

Problem recognition• occurs when the consumer’s desired state of affairs

departs sufficiently from actual state of affairs to place the consumer in a state of unrest

• can be triggered by either internal or external stimuli.• not all problems stimulate the same level of problem-

solving activity; the level depends on the magnitude of the discrepancy between the desired and existing states and the importance of the problem

Decision-Making ModelDecision-Making Model

Information Search• internal information search - memory scan based on

past experience.• external information search - major sources of

information are :• personal sources - friends & relatives• public sources - various reports & magazines.• marketer-dominated sources - advertising, sales

people• experience source - eg test driving a car

Decision-Making ModelDecision-Making Model

Evaluation of Alternatives• Set selection criteria for evaluation and

selection -- price, style, colour, brand, store

Choice• Having gone through the steps above, the consumer

makes a decision• Decide to purchase one which satisfies maximum

criteria or minimises dissatisfaction criteria

Decision-Making ModelDecision-Making Model

Post-purchase evaluation• consumer assesses how satisfied or dissatisfied they

are with the final purchase decision.• if satisfied, the purchase decision and process are

reinforced.• dissatisfaction can occur with either the retail outlet or

the product.

Decision-Making ModelDecision-Making Model

Post-purchase evaluation - cognitive dissonance

• cognitive dissonance occurs when a consumer recognises an inconsistancy between their values and their behaviour and can arise when the consumer becomes aware that unchosen alternatives have desirable attributes; this leads them to wonder whether or not they have made the right decision.

• cognitive dissonance can be reduced by reassessing unchosen alternatives or by seeking information which will validate their choice.

Steps involved in the purchase of a new jumper

• Problem Recognition– cold weather; new fashion in jumpers; old

jumper has a hole in it etc.

• Information Search– internal search (memory of last purchase);

discuss with friends/relatives; fashion magazines; advertisements in print or on television; sales assistants; window shopping.

Steps involved in the purchase of a new jumper

Alternative Evaluation• Evaluative criteria : price; colour; size; style;

brand• Determinant criteria : will vary between students

Choice• Having gone through the steps above, the consumer

makes a decision • decide to purchase using cash, lay-by, credit

Outcomes• happy with the purchase decision; dissatisfied -

cognitive dissonance.

Organisation interact with customers at each of the five stages of the decision-making process.

• Problem Recognition– through personal selling, direct mailing to let

potential customers know about new products which may fulfill a specified need.

• Information Search– advertising, personal selling.

Organisation interact with customers at each of the five stages of the decision-making process.

• Alternative evaluation– presentation of company products with

possible modification to fit specific needs.

Organisation interact with customers at each of the five stages of the decision-making process.

• Choice– easy access purchase facilities eg through

mail order or faxes

• Outcomes– use follow-up techniques to minimise cognitive

dissonance.

The Buyer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behaviour

Types of Buying Decisions

ComplexBuying

Behaviour

Dissonance-Reducing Buying

Behaviour

Variety-Seeking

Behaviour

HabitualBuying

Behaviour

HighInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

LowInvolvement

Life-style dimensionActivities

WorkHobbies

Social EventsVacation

EntertainmentClub

membershipCommunityShopping

Sports

Interest

FamilyHomeJobCommunityRecreationFashionFoodMediaAchievement

Opinions

ThemselvesSocial IssuesPoliticsBusinessEconomicsEducationProductsFutureCulture

Demographics

AgeEducationIncomeOccupationFamily SizeDwellingGeographyCity SizeStage in life cycle

Lifestyle Dimension

ActivitiesWorkHobbiesSocial EventsVacationEntertainment Club membershipCommunityShoppingSports

InterestFamilyHomeJobCommunityRecreationFashionFoodMediaAchievement

OpinionsThemselvesSocial IssuesPoliticsBusinessEconomicsEducationProductsFutureCulture

B. Socioeconomic and demographic variables associated with consumer lifestyle.

AgeEducationIncomeOccupation

Family SizeDwellingGeography

City SizeStage in life cycle

Individual and social factors play an important role in the consumer’s decision-making process

Individual FactorsPerceptionMotivationLearningValues, beliefs & attitudesPersonalitySelf-conceptLifestyle

Social FactorsReference groupsOpinion leadersFamilyLife cycleSocial classCultureSub-culture

Consumer Decision Making Process

Buy/Don’t Buy

Motives -Maslow’s Hierarchy of Needs

Self-Esteem

Belongingness

Safety

Physiological

SelfActualization

Social Factors: Group Influence

PublicLuxuries

PublicNecessities

PrivateLuxuries

PrivateNecessities

Gro

up In

fluen

ce o

n Pr

oduc

t Cho

ice Strong Weak

Group Influence on Brand Choice

Strong

Weak

Family - Consumer Buying Roles

Decider

Buyer

User

Influencer

Initiator

KeyFamily

DecisionRoles

Family and Lifestyle InfluencesFamily Influences

Age and Life Cycle Stage Occupation

Economic Situation

Lifestyle Identification

Activities Opinions

Interests

VALS 2Actualizers

Principle Oriented

Fulfilleds

Believers

Status Oriented

Achievers

Strivers

Action Oriented

Experiencers

Makers

Minimal ResourcesStrugglers

Abundant Resources

iVALS Wizard

Pioneer

Surfer

Upstreamer

Mainstreamer

Steps in Consumer Decision Process

Recogni-tion of problem orOpportunity

Search forMostAppropriateSolution

Evaluation ofAlternativeSolution

Evaluation ofAlternativeSolution

Search forMostAppropriateSolution

Recogni-tion of problem orOpportunity

IndividualInfluence

Environ-mentalInfluence

Marketing Planning & Implementation

• Strategic Analysis• Formulation of Strategy• Strategic Implementation

5 Major Areas

• Market-led approach to planning• Analysis• Techniques for analysis and strategy

development• Strategy formulation and selection• Implementation and Control

– The 7 S’s model– Benchmarking

Strategic Analysis

• External Analysis• Segmentation

E.g. MBA benefit segments• Internal Analysis• Developing a Future Orientation

– Forecasting– Scenario Planning

Strategic AnalysisExternal Analysis• Macro-environmental Analysis (PEST or

STEP)• Industry Analysis (Microenvironment,

Porter’s 5 competitive forces)• Competitor Analysis

– Identification, competitors’ objectives & strategies, reaction patterns, etc.

• Market Analysis– Actual & potential mkt size, trends, customers,

customer segments and distn channels

Strategic Analysis

Internal Analysis• Organisational Capabilities

– Assets• Financial, physical, operational, people, legally

enforceable, systems & mktg.

– Core Competence• Auditing Process

– Tools• Portfolio Analysis• SWOT Analysis• Value Chain

Organisational Assets(Internal Analysis)

• Financial assets – such as working capital• Physical ‘’ – ownership or control of facilities

& property• Operational ‘’ – prod’n plant & process

technologies• People ‘’ – quantity & quality of HR• Legally enforceable ‘’ – ownership of

copyrights & patents• Systems ‘’ – MIS & database

Organisational Assets(Internal Analysis)

MKTG:A. Customer-based ‘’

1.     Image & reputation – corporate identity2.     Brand franchises – customer loyalty3.     Mkt. leadership, e.g. beneficial shelf positions in retail

outlets4.     Country of origin – Germany is associated with efficiency

& quality5.     Unique pdts. & services 

B. Distribution-based ‘’1.    The size & quality of the dist’n network2.     Level of control over dist'n channels, e.g. Coca-Cola &

McD’s 

Organisational Assets(Internal Analysis)

MKTG:C. Internally-based ‘’

1.    Cost structure → pricing2.    Info. Systems → MR3.     Innovatory culture, e.g. 3M4.     Production skills, e.g. TPS

 D. Alliance-based ‘’1.    Access to mkts. – local distributors2.    Mgt. Expertise – from outside agencies3.    Access to technological developments or processes –

through licensing or JV4.    Exclusive agreements – Coca-cola & McD’s

Core Competemce (Internal Analysis)

• Define the basis of SCAs– Skills & resources needed within defined

mkts– Long term consideration

• Aim– To match organisational capability with

desired goals & the external environment • Major resource implications

– Investment & rationalisation

Core Competence

This is what a company does best & what differentiates it from the competition. Honda, CNN, 3M, &

Canon are part of the pack that put the concept into action. Rather than basing their strategies on pdts or mkts, these companies focus on competencies that given them access to multiple mkts & are tough for competitors to imitate.

The Boston Consulting Group’sGrowth-Share Matrix

20%-18%-16%-14%-12%-10%- 8%- 6%- 4%- 2%- 0M

arke

t Gro

wth

Rat

e

10x 4x 2x 1.5x 1x Relative Market Share

.5x .4x .3x .2x .1x

Stars

5

4 3 ?Question marks? ?2

1

Cash cows

6

Dogs 87

SWOT Analysis

Strengths•Cost Advantages•Financial Resources•Customer Loyalty•Modern Production

Facilities•Patents

Weaknesses•Too narrow a Pdt Line•Lack of Mgt. Depth•High Labor Cost •Obsolete Prodn Facilities•Inadequate Financing

Capabilities•Weak Market Image

Opportunities

•Add to Product Line•Enter New Markets•Acquire Firms With

Needed Technology

Threats•Changing Buyer Tastes•Likely Entry of New

Competitors•Adverse Government

Policies

Problems

Leverage

Constraints

Vulnerability

The Generic Value Chain

InboundLogistics

Opera-tions

Out-bound

Logistics

Market-ingand

sales

Serv-ice

ProcurementTechnology Development

Human resource managementFirm infrastructure

Mar

gin

Margin

Value Chain by Porter(Internal Analysis)

The concept of value chain categorises the org. as a series of processes generating value for customers & other stakeholders. It split activities into:

• Primary value activities� Inbound logistics - material handling &

warehousing� Operations - transforming inputs into the final pdt� Outbound logistics - order processing & dist’n� Mktg. & Sales – Com’n, pricing, & channel mgt.� Service - installation, repair, & parts

Value Chain by Porter(Internal Analysis)

• Secondary value activities� Procurement - procedures & information

systems� Technology development - improving the

pdt & processed systems� HRM - hiring, training, & compensation� Firm infrastructure - gen. mgt., finance,

acct’g, gov’t relations, & quality mgt.

Developing a Future Orientation

• Scenario Planning• Peter F. Drucker

Scenario Planning4 key stages in the development of simple

scenarios:• Identify the critical variables

– To use a brainstorming session to establish the factors that will drive changes in the future

• Develop possible strings of events, more than1 view or interpretation

• Refine the scenarios, consistency. E.g., a scenario wouldn’t be internally consistent if it had the UK gov’t cutting interests while at the same time the Pound was dramatically strengthening against the Euro.

• Identify the issues arising, a major impact on the organisation or not?

Scenario Planning (benefits)

• It is a useful technique to help mgrs. understand the critical issues that lie at the heart of the future of org. It can help create a framework within which to understand events as they evolve.

• It prepares mgrs. For the possibility there may be discontinuities in the external environment.

• Critically, it helps to place fundamental strategic issues on the mgt. agenda.

N.B. The key dimension of scenario writing isn’t so much forecasting the future but helping mgrs. to understand the factors that could have a major impact on their business.

Peter F. Drucker

Managing for the Future: The 1990’s and Beyond (1990)

4 MKTG Lessons for the Future• buying customers by underpricing

boomerangs• one can use mkt. research only on what is

already in the mkt.• the customer rather than the maker defines

a mkt.• mktg. starts with all customers in the mkt.

rather than with our customers

Formulation of Strategy

Formulation of Strategy• Strategic Intent, Mission, Objectives• Strategy Formulation

– Competitive Advantage– Mkt. Position

• Mkt. leaders, challengers, followers & nichers• Offensive & defensive strategies

– Pdt. & Mkt. Strategies• Pdt/mkt matrix• PIMS• PLC

Types of Competitive Advantage

• Superior pdt or service (real benefits), such as Sony & Boeing

• Perceived advantage as a result of a pdt’s image & personality, e.g., Coca-Cola & Mercedes. They are usually built through advt’g & can also be developed through design, heritage or styling, such as Dunhill & Cartier.

• Global skillsThe C.A. includes global distribution; ability to

produce & mkt. effectively on a multi-country basis; and skills at entering new countries. E.g., C-C, McD’s & Mars

Ansoff’sProduct/Market Expansion GridExisting New

productsproducts

1. Marketpenetration

3. Productdevelopment

2. Market 4. Diversificationdevelopment

Existingmarkets

Product/Market Expansion Grid Based on Starbucks

making more sales to current customers without changing its products.

–How? Add new stores in current market areas, improvements in advertising, prices, etc.

identify and develop new markets for its current products.

–How? Review new demographic (senior consumers) or geographic (Asian, European & Australian) markets

Product/Market Expansion Grid Based on Starbucks

offering modified or new products to current markets.

–How? Increasing food offerings, sell coffee in supermarkets, extend to Frappuccino drinks.

start up or buy businesses outside current products and markets.

–How? Currently testing two new restaurant concepts – Cafe Starbucks and Circadia, or branded casual clothing.

Fad & Fashion Product’s Life CycleSa

les

volu

me

Time

Fad e.g. Tamago -chi

Fashion e.g. mini skirts

Sale

s vo

lum

e

Time

Fad e.g. Tamag -chi

Fashion e.g. mini skirts

Formulation of Strategy

• Porter’s 3 Generic Strategies• Targeting & Positioning • Brand Strategy

– Brand equity• Product Development• Alliances

– Globalisation, assets & competencies, risk, and learning & innovation

• Strategic Mktg. Plan

Porter’s 3 Generic Strategies

1. Overall Cost Leadership To achieve the lowest costs among those

competitors adopting a similar differentiation or focus strategy

E.g., Wal-Mart, Toys “R”Us & Samsung A low-cost producer creates imperfect

competition by: Reducing the bargaining power of suppliers ‘’ ‘’ ‘’ ‘’ ‘’ customers Making substitutes less attractive

Porter’s 3 Generic Strategies

2. Differentiation To cultivate those strengths that will give it a competitive

advantageE.g., Nike, Gucci, L’Oréal hair colour, Canon’s copier (quality

leader) Mkt. shares vary greatly

Sellers of luxury brands, such as Mercedes, Hermès or Cartier, earn huge margins on ea. item sold but hold a tiny share of the mkt. (differentiation + segmentation)

Others earn less exorbitant margins but posses a huge share of the mkt., such as Coca-Cola, Campbell’s soup, Quaker Oats oatmeal, Gatorade & Heinz ketchup

It creates ‘’ ‘’ in the following ways Reducing the bargaining power of customers Making substitutes less attractive Reducing rivalry

Porter’s 3 Generic Strategies3. Focus

To focus on 1 or more narrow mkt. segments rather than going after a large mkt, e.g., Naxos

Creates ‘’ ‘’ by: Reducing rivalry ‘’ pressure from substitutes

Mercedes-Benz? Engineering excellence differentiation Customer base segmentation

4. Stuck in the Middle Almost guaranteed a low profitably Firms get stuck for the following reasons:

inexorable mkt. changes, e.g., Wing On & Sincere Competitor’s actions

Connecting With Customersdetermining distinct groups of buyers (segments) with different needs, characteristics, or behaviour.

evaluating each segment’s attractiveness and selecting one or more segments to enter.

arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

• What is the difference between a market segment and a market target?

Brand Strategy

4 options for overall brand strategy• Corporate brand

– 1 corporate name across all its pdt.– Heinz uses this unified approach (Baked Beans, Cream of

Mushroom Soup, Tomato Ketchup)– Gives the opportunity of create economies of scale

• Multi-brand (or discrete branding)– Each pdt. is given its own unique brand name.– Such as P&G’s washing powder, Daz, Ariel, Bold– Appropriate if the org. is competing in a no. of different

segments & the consumers’ perception of a pdt’s position in 1 segment may adversely affect the consumers’ perceptions of another pdt.

Alliances• Globalisation

– Means of responding to the challenge– E.g., parts & components can be sourced

worldwide– Joint initiatives give access to expertise &

contacts in local mkts. and greatly help the process of mkt. entry

• Assets & competencies– Causes: downsizing, contract out & huge cost of

pdt. development– Inter-organisational synergy, the combined effect

of 2 or more orgs. working together is greater than their individual effect.

Alliances

• Risk– Spreading of financial risk,– ‘Go-it-alone’? Co-operative ventures can promote

industry stds. & common practices. E.g., VHS vs. Betamax

– Reduction of pdt. dev. time & ‘’ associated with pdt. launching

• Learning & innovation– Technology & skills transfer are often essential in

generating meaningful commercial benefit– Learning & knowledge transfer generated SCA

via collaborative ventures, Morrison & Mezentseff (1997)

Developing Relationships

Common principles of relationship MKTG• Use appropriately

Not all transactions are relational in nature. E.g., impulse buys or 1-off purchases don’t require, or offer, scope to develop relationships.

• Establish relationship drivers– MR techniques facilitate understanding of what is

important to building/maintaining relationships.– By identifying how customer expectations are set

& evaluated, orgs. are more able to generate +ve interactions.

Innovation Audit

1. Output – the no. of your innovations which reach the mkt.

2. SuccessIllustration (based on Table 77 of Davidson, H.)Innovation Criteria 3yrs ago

This yr.• No. of sig. innovations in past 5 yrs• No. successful• % success rate• % total sales in p/s launched in past 5 yrs• % incremental sales• Average annual sales per new pdt/s ($/£)• Incremental payback ‘’ ‘’ ‘’ (yrs)

CASE STUDY

CONTENTS1.Introduction2.Situation Analysis 3.Strategy Development4.Recommendation

1.INTRODUCTIONCompany background- Foundation in 1976- High quality skin & body care retailer- Was the first company to be certified to the

Humane Cosmetics Standard- Famous for inspired skin & hair care

products & use minimal packaging- Speedy selling frequency- Gained many awards

Company background

• Mission Statement

- To dedicate our business of social environmental change

- To balance the financial & human needs of our stakeholders

- A commitment to purchase only materials & products which meet the Company’s environmental & animal protection policies

- To ensures care, honestly, fairness & respect

- To passionately campaigns for the protection of environment

2.SITUATION ANALYSIS

2.1 Consumer Analysis2.2 Competitor Analysis2.3 Market Analysis2.4 Environmental Analysis2.5 Internal Analysis

2.1 Consumer Analysis--STP

• Segmentation Level- Niche Marketing

• Segmentation Base- Psychographic—Focused at lifestyle & personality differences

Targeting--Characteristic of potential/current Body Shop users

• Appeal to nature/natural products • Concern about environmental protection • High ethical standard• Caring • Animal lovers

X Targeting--Characteristic of Non potential Body Shop users

• Indifferent between natural and artificial products

• Not concern about the environmental protection

• Self-centered• Non animal lovers

Positioning

• The pioneer who fascinate the well being of the society by developing and promoting the non-animal tested natural products.

Consumer Analysis—Motivation

Emotion Needs • Help to protect the natural environment • Help to save animal lives • Peer group recognition/appreciation

Physical Needs• Having sensitive skin• Daily usage

Consumer Analysis – Unmet Needs

• Household products e.g. house fragrance, scented candle

• Beverage products e.g. healthy drink/snack

• Beauty center e.g. facial, slimming

2.2 Competitor Analysis

Identifying Strategic Group

* SIMILAR STRATEGIC CHARCTERISTICS:

• Product : natural, pure ingredients• Price : low med, HK$100 – 400• Place : retail shop owned,

convenient• Promotion: advertising, free gifts,

coupon• Target Ordinance: lady, 18-30 years

old, family

Full Line

Broad line, Good

services,

Low- med. price

Full line, Good

services,Med. price

Full line, Good services,Low price

Narrow line, Well

services,

Med-high price

Narrow line,Well service,Low-med

price

Narrow line, Good

services,

Med. price

Narrow Line

A MAP OF STRATEGIC GROUP

High GEOGRAPHICAL COVERAGE Low

• Product Range- Soaps, creams, lotions, fragrance, body

& hand care, hair care, facial, foot, home décor etc

• Strategies- Shipment guarantee- Birthday card for 25% off- 10% off all purchases when accrue UK

250- On-line shopping

Strength Weakness- Natural packaging - Limited

promotion- Diversification - Lack of ATL & PR- Wide product variety- Royalty program- High reputation

• Product Range- Body & hand, bath & shower, face care

& make-up

• Strategies- Monthly promotion

e.g. Lavender month, honey month- On-line shopping

Strength Weakness- Traditional packaging - Old packaging- Premium image - Low brand

awareness- Low coverage- Weak advertising

• Product Range- Skin care, hair care, sensory therapy,

bath & body

• Strategies- Free gifts- Membership, enjoy discount- On-line shopping

Strength Weakness- Unique product - Limited coverage- Young image - low brand

awareness

Strength Weakness- Loyal brand - Traditional - Geographic coverage packaging- Employees

• Product Range- Skin & health care products key brand

No7 & Botanic, Dental care, foot, bath & body, hair, fragrance, make-up, sun care, hand etc.

• Strategies

- Achieve modest sales growth

- Simple goal

- Advantage card

- Celebrity

- Free sample

Strength Weakness- Well known brand - Rely on stores

- Sufficient capital - Image

- Competencies - Weak product

effectiveness

2.3 Market AnalysisThreat of

new Entrants -

HIGH

Intensity of Rivalry - HIGH

Bargaining power of supplier -

MEDIUM

Bargaining power of buyers - LOW

Threat of

Substitutes - MEDIUM

• Threat of New Entrants– HIGH – market is growing; minimal

government intervention; high profit margin

• Bargaining Power of Suppliers– MEDIUM – threat of resource shortage;

not the key customers to suppliers

• Bargaining Power of Buyers– LOW – differentiated products; brand

loyalty causing high switching cost; low price sensitivity

• Threat of Substitutes– MEDIUM – DIY by consumers; take pills or

medicines made from natural ingredients

• Intensity of Rivalry– HIGH – high yield market; more participants are

anticipated to enter

Natural health industry, cosmetics market and its sub-markets are attractive to companies to enter

• Alternative distribution channels and their relative strengths– Direct Marketing: On – line Purchase

Relative low operating cost, ease of purchase

– Beauty SalonHelps to upgrade brand image & perceived value, strengthen the credibility

– Fashion/Retail StoreFashionable and trendy

– Dept Stores: Supermarkets or SuperstoresEnlarge the distribution coverage and source of sales & profit

• Industry Trends

– Rivalry will be intensified– Companies are expanding their natural

products lines as a result of high awareness of healthy life importance by consumers

– Backward integration strategy becomes a common way for market participants to ensure product quality, low production cost and efficient logistics control

– Celebrity

Current Key Success Factors

Quality and natural products Brand recognition and reputation Customer loyalty Professional and personalized service from

well-trained staffs Closed relationship with suppliers to ensure

quality materials and sufficient supply and decrease other operating costs such as logistics, time spent on quality check and communication etc

Future Key Success Factors

Economies of scale because of intense competition

Able to provide extensive range of natural products

Commitment to environmentally responsible and protection to win public support

Backward integration or setting up on plants and manufacturing department to get rid of resource shortage threat

2.4 Environmental Analysis

PEST Analysis Threats Opportunities TrendsPolitical/Legal Government regulation

Impact from New Legislation

Positive factor: Restriction on behaviors

Sourcing from developing countries

i.e., steel co and public utilizes have to invest billion of dollars for pollution control equipment

Protect co from unfair competition

Affect on products supply, especially terrorism issue, it makes export activities not stable

Tax legislation, Trademark legislation & Patent protection

(packaging regulation or export issue)

Protect customer from abnormal business practice

International trade regulations, i.e. Tariff TradeAgreement

Employment laws

i.e. Sales increase on some Retail industries due to the change of immigration policy of HK/China

• PEST – EconomicsPEST Analysis Threats Opportunities TrendsEconomic Trends in GNP Exchange rates

affect overseas ventures.

Low Interest Rate

Unemployment Rate is around 8% in HK

Interest rates i.e., terrorism: lower the exchange rate of US dollars; and

Increase buying power

Retail industry tends to use female as the main workforce

Levels of discretionary income

pull down the stock market

Price competition

Exchange rates

Inflation rates Unemployment levels

Fiscal Policies

• PEST – Social

PEST Analysis Threats Opportunities TrendsSocial Social movement (i.e., the consumer movement)

Decreasing Birth Rate

China Overall Academic background increased

Socio-cultural drift (i.e., working wives, lifestyles)

Major buying power belongs to Youngster and women, thus, affect the society buying habit

Thus, lifestyles change, birth rate decreasing

Demographic changes

PEST – TechnologyTechnical Threats Opportunities Trends

R&D Doubt on new technologies, i.e. Telemarketing & online shopping

Advancement in Technology

Technology level growth dramatically fast for the recent 50 years

Technological forecasts

Substantial amount of experiment is Required for new technologies

More co choose this channel for new product launch

Huge spending on R&D for many industry

• PEST – Social

PEST Analysis Threats Opportunities TrendsSocial Social movement (i.e., the consumer movement)

Decreasing Birth Rate

China Overall Academic background increased

Socio-cultural drift (i.e., working wives, lifestyles)

Major buying power belongs to Youngster and women, thus, affect the society buying habit

Thus, lifestyles change, birth rate decreasing

Demographic changes

PEST – TechnologyTechnical Threats Opportunities Trends

R&D Doubt on new technologies, i.e. Telemarketing & online shopping

Advancement in Technology

Technology level growth dramatically fast for the recent 50 years

Technological forecasts

Substantial amount of experiment is Required for new technologies

More co choose this channel for new product launch

Huge spending on R&D for many industry

The major strategic uncertainties and information read:

New tests and regulations- Production cost would be high and the profit margin would be reduced.- Specific quality standards to meet regulatory needs.

• Due to terrorism, economic would be not stable, no more investment on capital

• Consumers health safety – demand for reliable products

Scenarios

• To be a unique leader• Consider to develop superior

detoxification and aromatherapy products• Real threats from short to long term

2.5 Internal Analysis

• Resources Audit• The value chain• Core competence• Strategy

Resources Audit

Physical & Financial Resources• Strong retail outlet, global presence, a 300 million

pound company• Gross margin is high (overall increase of 1.3% to

60.8%), operating margin is low (2.5 last year, and 5.9 this year)

Human ResourcesNew management team which brings in new concept

Intangible ResourceStrong brand equity

4. New Company Recommendation

New Company Recommendation – STP

Segmentation • Demo-Psychographic

Targeting • Couples with 1-2 child/kid (aged below 15)• Mid to high income • Only giving the best to their child/kid • Animal lovers

Positioning

• The most reliable all natural skin care products for your baby/kind

Brand Equity • The most reliable friend who take care

of your child/kid

New Company Recommendation – 4Ps• Brand -- NUBE “New Born Baby”• Price -- Premium pricing (most expensive in

the market) • Product -- All natural, non animal tested skin

care products for baby & kids• Place -- Exclusive listing, only available at

specialized stores, clinic, premium drug stores

• Promotion -- Informative/scientific approach, niche advertising/promotion e.g. doctors/nurses